Friday, October 3, 2014

Seems like there's still a lot of plummeting left in the tank too, eh?

Boy, do gold miners suck™!!!

So here's a music video that'll help all you sad goldbugs keep your chin up this weekend as you stare at a screen full of red and try to puzzle out how to spin this chickenshit to your subscribers - or if you're not a newsletter writer or blogger, to your soon-to-be-ex-wife and soon-to-be-ex-children:

The truth is that the quiescence of interest and inflation rates was predicted by everyone who understood the obvious — that we had entered a liquidity trap — and thought through the implications. I explained it more than five years ago. When central banks have pushed policy rates as low as they can, and the economy is still depressed, what that tells you is that the economy is awash in excess desired savings that have nowhere to go.

One of the people in this debate is a real economist who has a fucking clue what he's talking about, and his name rhymes with Sprugman.

It's still only at the EMA(14) right now, so we still don't know if the fear is done. But HYG is also looking healthy again:

And all this despite the US dollar still flying upwards today:

So I guess suddenly the market's no longer worried about the Pimco outflows or an Ebola pandemic on American soil or the Ukrainian civil war or an impending massacre in Hong Kong or the fight against the Islamic State or the fucking Rage Virus or whatever.

The hard drop in the Nikkei on Wednesday and Thursday seemed really stupid, so I guess that was the bell that rang the bottom.

Thursday, October 2, 2014

The Consumer Expenditures Survey is the only federal survey that documents the full range of consumers’ expenditures and incomes, and is used to determine the weights in the CPI. The survey’s data is built around an interview survey where workers from the U.S. Census Bureau ask households about their expenditures on big-ticket items, and a diary survey in which people are asked to track all their purchases over the course of two weeks.

In recent years, the response rate has gone from slow deterioration to free fall. In 2011, more than 70% of people responded to both surveys, but as of 2013 the response has dropped to 66.7% for the interview survey and 60.8% for the diary survey, both the lowest on record.

Non-response to surveys has been a growing problem in social sciences — in 2004, the Office of Management and Budget said government surveys with response rates below 80% needed to study if the lack of response was biasing the survey — and the collapsing response rate to the expenditures survey has gone far below that threshold.

Y'know, I think I see the problem here.

The Census Bureau is expecting serfs to give them a pile of information for free. That information is being used to guide economic policy, which is worth several trillion dollars a year.

It might just be that the serf class has decided that, since they haven't seen a raise in real income in a generation, and they don't get a damn penny from participating in this survey, that they have nothing to gain by providing the Census Bureau with free information.

Sure, it's probably not really as much of a Marxist class civil disobedience thing as I've made out: it's probably just that people are sick and tired of giving information over the phone and getting nothing in return.

So in any case, if this information is so damn important to the government, why not pay each respondent $500 to participate in the survey? It's not a massive sample size, so $500 per person won't be expensive. And hey, since it's the corporations that ultimately benefit from the government policy driven by inflation data, how's about maybe adding 0.01% to their tax bill, and distributing that money directly to the serfs who respond to the survey?

Non-response to surveys is not a social science problem; it's an economic problem. Either the information is worth nothing, or it's worth a lot. Why expect the masses to subsidize the collection of this information with free labour? Ain't it the capitalist plutocrats themselves who are lecturing us that nobody should get anything for free?

Wednesday, October 1, 2014

Josh the Panty Piddler - another shoe drops. Now the Midcap 400 is - gasp! - below its SMA(50). Aw, if only Mister Piddles bothered to read my blog, he'd see this chart:

Tells a different story, no? It's the dollar, Piddles! Now harden the fuck up and go buy SPY with both fists, you goddamn sissy.

Calculated Risk - ISM "declines" to 56.6. I'd expect the low-rent end of the internet to mistake this ISM for a bad one. In contrast, a certain swarthy gentleman of English extraction made these points today:

- 15 of 16 industries surveyed reported growth;
- the 12-month average of the ISM is presently at 55.5, so it's still above average;
- the new orders strength in August was unsustainable, so the drop to 60 is still great;
- 12 of 16 industries reported stronger orders;
- employment was still above its 12-month average of 54.4.

That's the kind of analysis you get when you go to a pro and not someone looking to get a job writing doomer headlines for Zerohedge.

My thinking right now is that the recent $VIX has acted strange because the US dollar move has been >+2SD abnormal. So maybe people will want to buy downside protection on their equities until they see some proof of what's happened to corporate profits with the dollar move?

Thus, it might not be wise to short $VIX just yet.

There's no imminent market crash, but now that currencies are acting weird people are going to be scared and continue buying downside protection.

A UUP breakout above $23.20 or so would be very interesting. If it happens, that is.

Josh Brown, Barry Ritholtz, the Financial Times, all you hobbyist econobloggers out there who still take Zerohedge seriously should begin questioning your continued loyalty to a racist, anti-Semitic, neo-Nazi disinformation website that's funded by Russia.

Quote:

Now that Ebola is officially in the US on an uncontrolled basis, the two questions on everyone's lips are i) who will get sick next and ii) how bad could it get? We don't know the answer to question #1 just yet, but when it comes to the second one, a press release three weeks ago from Lakeland Industries, a manufacturer and seller of a "comprehensive line of safety garments and accessories for the industrial protective clothing market" may provide some insight into just how bad the US State Department thinks it may get. Because when the US government buys 160,000 hazmat suits specifically designed against Ebola, just ahead of the worst Ebola epidemic in history making US landfall, one wonders: what do they know the we don't?

“Put into laymen’s terms, the solar panels capture the sun’s energy, but pull on the sun over time, forcing more energy to be released than the sun is actually producing,” WIT claims in a scientific white paper published on Wednesday. “Imagine a waterfall, dumping water. But you aren’t catching the water in buckets, but rather sucking it in with a vacuum cleaner. Eventually, you’re going to suck in so much water that you drain the river above that waterfall completely.”

WIT is adamant that there’s no immediate danger, however. “Currently, solar panels are an energy niche, and do not pose a serious risk to the sun. But if we converted our grids to solar energy in a big way, with panels on domestic homes and commercial businesses, and paving our parking lots with panels, we’d start seeing very serious problems over time. If every home in the world had solar panels on their roofs, global temperatures would drop by as much as thirty degrees over twenty years, and the sun could die out within three hundred to four hundred years.”

Busy at work, but now I'm waiting for someone to correct their mistake on this oh-so-important job that they can keep me hanging.

So here's some news:

New Deal Demoncrat - stagnation in housing. He expects it to feed through into deceleration in the broader economy over the next few quarters. Stick that in your pipe and smoke it, Michael Shaoul and your inflation fear!

Reformed Borker (Bork Bork Bork!) - nobody's actually panicking yet. Sure, and I knew that already because $VIX is only 16 and the term structure isn't even inverted yet.

FT Alphaville - holy cow does Santander suck. They're paying out 1.5x earnings in divvies, thus the 9.2% yield. But Europeans are happily taking their divvies in shares, so the company instead is simply diluting itself. And you call European investors conservative?

FT beyond brics - EMs are bad, LatAm is the worst. Do any of those "buy EMs" bloggers out there ever look at the underlying weakness in the economies, and do any of them know that EMs die when the US goes into a secular bull market?

New Deal Demoncrat - Ed Yardeni is a wanker. Yup, he's set his sights on a higher level of economoblogginating clown now. Keep it up, ya pinko!

But it also suggests that a decline to say $3 below the SMA(50), say $88.50, is a fully reasonable downside target. Happened June 2013, no big.

Similarly,

the last big pop in Q was early 2012, which was followed by a descent towards the weekly SMA(50), which on this chart would be maybe $91 or so.

Dunno if what we're seeing today is Pimco liquidating tens of billions, or people selling in anticipation of Pimco liquidating tens of billions, or simply everyone saying "hey, people are selling, let's do that too."

I'm mostly cashed up, but still excited at the possibility of a real (10%) correction that I can short volatility at the end of.

FP - junior miners starting to disappear as grim reality takes hold. I guess at least Peter Koven went to the the Cambridge House clownfest in Toronto last weekend, if nobody else. Me personally, I couldn't be arsed, since most of the speakers were utterly worthless; and I'd never actually want to meet IR clowns from a shitty exploreco, nothing they say is ever going to be informative to me.

Here's Kaiser with his hopeful message:

“It will be hard to raise capital for several years,” analyst John Kaiser warned in a presentation. He said there are around 700 mining companies on the TSX Venture Exchange with negative working capital, and the total number of small miners is shrinking. “They are starting to disappear,” he added.

Dammit, John! You've been saying this for a year now. When will they disappear already? Or are they just going to continue polluting the Venture?

This part was funnier:

The Cambridge House show has always been a gathering point for some of the world’s most outspoken gold bugs, and they continued to pound the drum for bullion on Thursday despite a bear market that has pushed it down to around US$1,220 an ounce.

“The U.S. dollar is on its last legs,” predicted John Ing, president and gold analyst at Maison Placements Canada. Others echoed that view.

And that's the sad part: these idiotic scamfests are still full of hard-money wackaloons whose message is still crafted towards the unwashed toothless morons who have been wiped out by buying shitty explorecos. Don't they realize this is part of the problem?

What Cambridge House needs, and what the junior gold world needs, is to cut loose the podcast & blogger crowd and start featuring real analysts with an iota of common sense.

I mean seriously. Listening to "analysts" at a goldbug conference is just like wandering into a fundamentalist prayer meeting. The informational value is zero, you'll never learn anything; it's nothing more than a fantastical prayer-ritual full of magical thinking, mythologizing about imaginary demons, and fantasies about a future heaven where God gifts his Chosen people with a gold-backed dollar and Ron Paul in the White House.

If 700 juniors are truly about to expire, that means 700 fewer scammers. The industry should no longer need to scam people with clownish presentations that have zero informational content and zero connection with empirical reality. Let's quit with the goddamn scams and become a serious industry, no?

NY Times - Democrats go on the offensive in the culture war. I'd been wondering over the past few years how the hell the Republicans can even continue to exist as a party if they're so strongly anti-women - after all, doesn't the US let women vote?

So maybe the true shift in the American culture war is the sudden understanding that women make up 50% of the political debate.

Anyway, it's an interesting subject from a sociological perspective, and it'd be neat to consider the wider economic environment in which this is going on - the theory being that economic good times bring a swing to the left, while economic bad times usually cause a country to swing hard right.

New Deal Demoncrat - weekly indicators. Some deceleration from the heady days of Q2, but he thinks a Q3 of 3% is not out of the question.

Reformed Borker (Bork Bork Bork!) - do we need to fire Pimco? Seems there's a lot of concern that the firing of Bill Gross will result in a large movement of capital - on the order of hundreds of billions of dollars. So I guess that counts as a major market rebalancing, which suggests this market goes nowhere for a few months.

Gavyn Davies - labour underutilization in America. Here's another item of debate right now. Shaoul in particular thinks the labour numbers suggest incipient wage inflation, since some regions and labour sectors are already at full employment; doubters are responding to him by asking if he's actually seeing any wage rises anywhere right now.